The chairman of BP, Helge Lund, is set to step down, marking the end of an era defined by the company’s ambitious but ultimately unsuccessful foray into green energy.
The oil giant announced on Friday that Lund would be relinquishing his role “in due course.”
The announcement comes amid mounting pressure from Elliott Advisors, a US activist hedge fund, which has been pushing for significant changes within the company.
BP has already scaled back its previously adopted green energy plans, championed by Lund himself.
Lund, a Norwegian businessman, threw his weight behind BP’s 2020 decision to slash fossil fuel production by 40% by 2030 and transform into an “integrated energy company” with a strong focus on low-carbon energy sources.
He also oversaw the appointment of Bernard Looney as chief executive in 2020.
Looney spearheaded the company’s low-carbon strategy but subsequently departed due to undeclared relationships with junior staff, adding to the turmoil within BP.
“Having fundamentally reset our strategy, BP’s focus now is on delivering the strategy at pace, improving performance and growing shareholder value,” Lund stated on Friday.
Now is the right time to start the process to find my successor and enable an orderly and seamless handover.
Activist pressure: Elliott pushes for a return to oil
The resignation follows intense pressure from Elliott Advisors, which has amassed a 5% stake in BP.
The hedge fund has expressed dissatisfaction with the oil major’s strategy, arguing that it lacked urgency and ambition.
Elliott was reportedly preparing a shareholder vote to oust Lund.
BP initially announced its intentions to move away from oil and gas in 2020, proposing a tenfold increase in green energy investment and a 40% reduction in fossil fuel production by 2030, while ceasing exploration in new companies.
At the time, Lund asserted, “We are confident that the decisions we have taken and the strategy we are setting out today are right for BP, for our shareholders, and for wider society.”
However, BP’s competitors, who maintained their focus on rising oil demand, outperformed the company. As a result, BP shares underperformed, prompting the company to abandon significant portions of its 2020 strategy.
At a capital markets day in February, BP reversed course on many of its green pledges and committed to indefinite annual increases in fossil fuel production, signaling a clear shift back towards its core business.
What’s next for BP?
Ashley Kelty, an oil and gas analyst at Panmure Liberum, commented, “This is of little surprise after activist investor Elliott has build a large position in BP and started agitating for change. [Elliot was] gearing up to try to get a shareholder vote to get Lund forced out so he appears to be jumping before he’s pushed.”
Kelty predicts further action from Elliott, suggesting that the hedge fund “will now turn attention to CEO Murray Auchinloss – his attempt to pivot BP away from green energy look half hearted and we suppose that Elliott will want a new CEO that can undertake a proper reset on strategy.”
The succession process is being spearheaded by Dame Amanda Blanc, Aviva chief executive, in her capacity as BP’s senior independent director.
According to The Telegraph, a BP spokesman indicated that the successful candidate will join the board and collaborate with Lund to ensure a smooth transition before he steps down, most likely during 2026.
“The board and I are committed to supporting Murray and his team, and to overseeing BP’s delivery of its strategic and financial objectives as we set out in our recent capital markets update,” Lund emphasized.
Dame Amanda added, “We are starting a comprehensive search to identify chair candidates with the credibility and relevant experience to lead the board and continue driving management’s safe execution of the reset strategy.”
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